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Posted 2/23/11 : But increased marketing-spend will reap benefits going forward
The Australian betting group Centrebet has released a set of results for the half year ended December 30 2010 that will likely not be well received by investors due to a decline of 70 percent in net profits, mainly attributed to a marketing splurge of A$1,9 million more than was invested in this activity in H1 2009.
Justifying the expenditure, managing director Michael McRitchie said he expected the additional marketing to be reflected in improved second half results.
Despite the decline in profits, other key indicators of the company's performance were promising, and included:
* Underlying Australian revenue growth of 25 percent to $25.5 million;
* Net profit after tax of A$2.5 million;
* Project Rocket initiatives delivering strong results with Australian new depositing clients up 92 percent and Australian total active clients up 46 percent;
* Strong performance from TAB Fixed-Odds Management Services (FOMS) contracts, with revenues up 57 percent;
* Strong balance sheet maintained with $9.3 million surplus cash;
* Continued Australian market share growth with online revenue up 23 percent to A$24 million;
* Lower than budgeted client acquisition costs;
* Average revenue per client in-line with expectations;
* Strong TAB FOMS performance with revenues up 57% to $1.5 million.
The pleasing performance of Centrebet’s Australian operations was partially offset by a decrease in the performance of its European operations. On a constant currency basis the European net contribution declined by A$2.6 million, driven mainly by a decline in online casino and poker revenue and higher banking costs in Norway.
Centrebet continues to focus on its core Norwegian, Danish and Greek markets with an emphasis on improving cash generation from these markets, management noted. Casino and poker revenues stabilised in October 2010 and have shown improvement since then.
The company's chairman, Graham Kelly, said: “In this result we are starting to see the early gains we have made from our 5 Year Strategic Plan to place greater focus on the Australian market.
"Turnover, revenue, client numbers and market share have all grown. Our customers are responding well to Centrebet’s new products, our marketing initiatives are delivering results and we have made a good start towards achieving our longer term objectives.”
Centrebet managing director, Michael McRitchie, said: “In the coming months we expect to see the benefits of our increased marketing spend flow through to a stronger second-half. Centrebet’s exciting new racing and mobile telephony products which will be launched in the coming months should also contribute to further growth”.

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